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Export Sales Pace Strong For Cotton


Cocoa prices have been pressured by near-term demand concerns for nearly 2 years as the global COVID pandemic resulted in travel restrictions which reduced chocolate purchases. A nearly 10% rebound over the past 6 sessions indicates that demand concerns may be starting to subside, which could fuel additional price gains for the cocoa market this week.


The market continues to have a bullish supply/demand outlook, and that should help coffee to remain well-supported on near-term pullbacks. For the week, March coffee finished with a gain of 1.20 cents (up 0.5%) as the market continued to lift further away from its early January low. Indications that Brazil and Colombia’s upcoming coffee production will be negatively impacted by the current La Nina weather event continues to provide underlying support, as both nations combined accounted for 54% of global Arabica production during the 2021/22 season.


The upside breakout in March cotton is impressive and the continued advance in open interest might suggest there could be more short covering support just ahead. Technical indicators are extremely overbought but the news continues to come in with a bullish tilt. The market has now moved higher for six weeks in a row as cotton found carryover support from the adjustment lower by the USDA for production and for stocks.


While they remain on-track for a fourth negative monthly result over the past 5 months, sugar prices have lifted well clear of last Monday’s 6-month low. If key outside markets continue to have a positive tone, sugar should be able to extend its current recovery move.

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